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The Ins & Outs About IRS Audit Reconsideration

Harmon Tax Resolution
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Going through an IRS audit can be exhausting, especially if you receive an unfavorable outcome resulting in a tax balance due to the IRS. Before capitulating and forking over the money to the IRS, you may have the option to challenge some or all of the audit findings using an IRS Audit Reconsideration. An Audit Reconsideration is a process the IRS uses to reevaluate the results of a prior audit when specific criteria have been met.

When Can I Use An IRS Audit Reconsideration?

The IRS offers an Audit Reconsideration process if you disagree with the audit results of your tax return. The Audit Reconsideration allows you to provide your explanation as to why you feel it should be overturned. Here are some of the reasons you could request an audit reconsideration:

  • You disagree with the audit assessment findings and can provide a reasonable basis for the dispute. You must clearly state which part of the audit you are disputing and why. For example, the audit incorrectly classified income or expense characterizations.
  • You have additional pertinent information not presented during the audit. You have new information to show the IRS about the audit of your income or expenses. For example, an audit denied an expense due to lacking supporting documents; you acquired them after the audit.
  • You didn’t appear for your audit due to a legitimate reason.
  • You relocated and never got the IRS’s audit report.

When Am I Not Able To Use An IRS Audit Reconsideration Process?

  • You’ve already paid the full amount you owe. In that case, you must file a formal claim for a refund with an IRS Form 1040X, Amended U.S. Individual Income Tax Return.
  • You previously agreed to pay the amount you owe by signing an agreement such as an IRS Form 906, Closing Agreement; an offer in compromise agreement; or an agreement on IRS Form 870-AD, Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment, with the Office of Appeals.
  • The United States Tax Court or another court has entered a final determination that you owe the taxes.

How Do I Apply For An IRS Audit Reconsideration?

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An Audit Reconsideration is done by making a written request to the appropriate IRS office listed on your audit report. If you are unsure where to send it, please refer to IRS publication 3598, which lists the addresses and phone numbers of all IRS offices dealing with audit reconsiderations. The publication also provides information about materials you must submit with your request.

Steps For Submitting An IRS Audit Reconsideration Request

Step 1: Acquire Appropriate Documentation

Analyze your audit report to determine the disagreeable items you are contending. You will then need to obtain new information not already previously provided to IRS, which supports your position. Ensure this information is relevant to the tax year listed in the audit report. Please present a clear audit trail of source documents to each audit report listing you are disputing.

Step 2: Submit Your Documentation

You will need to submit to the IRS the following items:

  • A copy of your audit report (IRS Form 4549).
  • Copies of information that support your position (typically, these are payment receipts, canceled checks, bank and credit card statements, invoices, contracts, loan documents, and 1099 Forms).
  • Copies of materials you previously gave to the IRS – usually listed within Information Document Request 4797 sent to you.
  • A letter clearly stating your reason for reconsideration; the IRS suggests using IRS Form 12661, Disputed Issue Verification.
  • Include daytime and evening phone numbers and the best time for IRS to call you.

Remember to make photocopies of all documents you are sending. Please do not send the originals since the IRS will not accept them and may reject your request for audit reconsideration if you attach them.

How to Write an Audit Reconsideration Letter

You can write a letter to request an IRS Audit Reconsideration rather than completing IRS Form 12661. Sometimes this is chosen if it makes it easier to state one’s position in this fashion over using the IRS form 12661. The letter must provide the reason for requesting the audit reconsideration and an overview of the additional information explaining how the audit findings are inaccurate.

Because IRS Audit reconsiderations are relatively complex, having a tax attorney with an audit background would be ideal for assisting you with the best way to handle your appeal. Tax Attorney, Will Harmon of Harmon Tax Resolution, is also a CPA with significant audit experience and can adequately address this for you.

What Is The Time Frame For An IRS Audit Reconsideration Completion?

Typically, the IRS will contact you within thirty days of receiving the Audit Reconsideration request; however, it’s unsurprising if it took up a couple of months before they do. During this period, penalties and interest and penalties continue to accrue on unpaid tax balances. The IRS may delay collection activity during their investigation based on your request, but this is not guaranteed. If you are under an installment plan, you will want to continue making payments. If you are experiencing financial difficulties with paying your IRS debts, there may be some tax relief programs you possibly qualify for. Seeking a tax attorney-CPA to assist would be helpful for your situation.

If the IRS needs additional information to assist with their determination, they will contact you via mail. Bear in mind that if you were able to have collections halted during the reconsideration process and the IRS finds that if you don’t respond to additional information requests within thirty days or have submitted insufficient information, the IRS may resume its collection activities.

To help move your case forward, you can also contact the Taxpayer Advocate’s Office and ask them to expedite your audit reconsideration case. This can be done by completing Form 911, Request for Taxpayer Advocate Assistance.

What Happens Upon The Completion Of An Audit Reconsideration?

Shortly after the IRS completes its review of your audit reconsideration, you will be contacted with their decision which could result in a complete or partial reduction of the contested items’ original tax. If the IRS makes no adjustments, the original balance will remain due.

Do I Have Any Options To Challenge The Audit Reconsideration Ruling?

If you disagree with the results of the reconsideration, there are several options:

  • Request an Appeals Conference,
  • Pay the amount due in full and file a formal claim, or
  • Do nothing. IRS will send you a bill for the amount due.

Some tax relief options may be available if you have problems paying the IRS tax debt.

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To ensure that you align yourself with the best possible outcome, whether dealing with a challenging IRS audit/assessment or seeking tax debt relief, have an experienced tax attorney-CPA-EA provide the expert guidance to get you there. Call today (772-418-0949), or complete an online inquiry form for a free consultation with experienced IRS Audit Reconsideration Tax Attorney-CPA-EA, Will Harmon of Harmon Tax Resolution, LLC. He will handle your audit reconsideration and any other IRS issue so that you can put this behind you and get on to doing the things that matter most.

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For additional information, please see the following blog articles:

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